NY Solar Tax Credit

[jnearby]

I installed solar panels in 2021 and have completed the Federal Credit section.  In the NY State return it asks for the total of lease payments and the amount paid in 2021.  The State IT-255 form is unclear about whether I can claim the total lease cost for 2021 or just the amount paid in 2021.  

There is a $5K difference in my refund based on this entry.  

What amount do I use?

[LenaH]

Per the IT-255 instructions, the credit is equal to 25% of your qualified solar energy system equipment expenditures and is limited to a $5,000 credit. Per the instructions, you must enter the total amount of all your payments to be made under a written agreement that spans at least ten years for the lease of solar energy system equipment not owned by you.  The equipment must be installed, placed in service, and used at your principal residence located in New  York State.  Do not  include payments made with nontaxable federal, state, and local grants.

I completed a mockup NY return. I entered a total cost of $10,000 of lease payments and an amount paid of $20,000. 

The credit I received was $2,500 (25% of $10,000).

IT-255

[jnearby]

The total of the 25 year lease payments is approx. $33K and my 2021 payments totaled $468.  

Do I use the $33K for the amount paid in 2021 or the $468?  Makes a huge difference.

[LenaH]

I reentered your actual numbers into TurboTax and this helps clarify your question. Your credit would be $468. 

I have attached Form IT-255 for your reference.

• Column A would be the date of service.
• Column B would be the $33K.
• Column C would be  $5,000.
• Column D would be $468. 
• Column E would be $468. Enter the difference between column C and the total amount related to this lease from all previous years’ Forms IT-255, line 1. Then, enter the lesser of column D or column E.

@jnearby